Which of the Following Statements Is Correct Regarding the Adjustment

question 114

Multiple Choice

Which of the following statements is correct regarding the adjustment to record interest accrued on a note payable?

• A) Interest on the note payable is classified as an expense since it is a cost of borrowing.
• B) Interest on a note payable should be credited to Notes Payable because it increases the amount of principal to be repaid at the maturity of the note.
• C) Interest on the note payable is classified as a revenue since it is an amount that can be earned on investments.
• D) Interest on the note payable will not accumulate because it is paid at the end of each year.

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Definitions:

Negligence

The failure to take reasonable care to prevent harm to others that a reasonably prudent person would have taken under the same circumstances.

Check 21 Act

A U.S. federal law that facilitates check truncation by creating a new type of negotiable instrument called a substitute check.

Electronically

Refers to processes, transactions, or communications that are conducted using electronic devices or over the internet.

Mandatory

Required or obligatory, implying that it must be done or adhered to without choice.